If you’re upside down on your house, and need to sell your property then a short sale may be the best plan of action for you.
A lot of home owners are misled into thinking that there must be some specific reason to do a short sale. The fact is there are many different reason you need to consider doing a short sale on your house. Divorce, relocation, price, and relocation are merely a few of the explanations.
There are plenty of different benefits on a short sale over the alternative such as renting , not selling or foreclosure. Here are a few of the reasons why a short sale may be right for you:
The Impact to Your Credit
Having a smaller effect on your credit report is a benefit of a short sale. If you’re current on your note payments, having such a large debt removed could be a positive towards your credit score. If you’re late on making your payments, then the sooner you can sell the property the better. Your credit history will improve when you sell and make up the payments. If you’re behind, having a short sale is usually a smarter optionthan a foreclosure.
Forgiveness of Debt
A short sale will let all remaining debt to be forgiven. As an example, if your owe $400,000 on your note and the house sells for $300,000, the remaining $100,000 will be forgiven by the lender. This includes condominium charges, closing cost, property taxes, commissions, and so on. It could be difficult to believe that the lender would ever agree to this. Consider this however , statistics indicate that a short sale will sell at 26% more than if the lender sells it as a foreclosure. That isn’t even including the other home loan payments that’ll be missed or the price of the foreclosure. Banks are very content to accept debt forgiveness with a short sale.
The Real Estate Market
If you are upside down on your home, you might think postponing the sale of your property until the market returns to a point you can sell and come out on the up side is a great idea. You might want to rent the property out, or stay and stick it out. The difficulty is, the market is still declining and may not see an upwards move for another decade. Renting the property or staying in the home might turn out to be a disaster for you. If you would like to do this, plan on for a least 7-10 years before you attempt to sell.
If you want to sell your house and if your home loan is more than your house is now worth, you need to seriously consider doing a short sale.